The London Metal Exchange (LME) has just rolled out the next step in its mission to create sustainable metal premium pricing for brands that are LME-approved. As part of this exciting initiative, the Exchange is set to introduce a new entity under the HKEX Group in Dubai, which will serve as the pricing administrator. The firm has also put out a discussion paper that lays out its proposed pricing methodology.
LME first noted its plans to look into sustainable metal premium pricing back in April 2025. Now, it has rolled out a comprehensive roadmap that details how it intends to approach sustainable metal premium price discovery.
This framework puts a strong emphasis on standardisation and transparency as its core principles. It also underscores the crucial role of the pricing administrator and the vital link between sustainable metals and the security of the critical minerals supply.
Matthew Chamberlain, LME Chief Executive Officer, stated, "Our goal is to publish premium prices for sustainable metals, underpinned by robust definitions and real trading activity, which will enable our industry to unlock the potential value of sustainable metal production. We recognise that there may not be a premium for every metal, but there is a clear market desire to determine whether one exists and the LME is keen to play a part in answering this question."
Components required to follow LME sustainable pricing solution
LME brand list
All metals bearing the LME brand will continue to meet the firm’s high standards for quality and responsible sourcing, ensuring that globally recognised sustainability principles are at the heart of its operations. Building on this solid foundation, LME is looking to create premium pricing strategies for copper, aluminium, nickel and zinc that not only align with current standards but also showcase the enhanced sustainability credentials that metal consumers are increasingly seeking.
LMEpassport transparency
LME-listed brands are currently sharing their sustainability data through LMEpassport, which is the firm’s free digital credentials register and now holds over 1,300 disclosures. After a thorough consultation with the market, LME has set up premium sustainability thresholds for each metal. These thresholds include specific carbon footprint limits and verified third-party sustainability assurances that align with global standards. LME will keep an eye on these thresholds and review them periodically to make sure they stay relevant to the market.
Also read: LME aluminium cash bid rises to USD 2,752/t as stocks decline 4.8%
Trading platform
Metal sourced from LME brands that meet the premium sustainability standards detailed in the LMEpassport disclosures is eligible for trading in the sustainable metals section of the Metalshub digital platform. As a strategic partner of LME, Metalshub is already making it easier to buy LME-grade low-carbon nickel. Since March of last year, the platform has listed a total of 1,942 tonnes of low-carbon nickel, with 488 tonnes successfully traded.
Pricing administrator
To set prices for metals that align with premium sustainability standards, the newly established HKEX Group company, Commodity Pricing and Analysis Limited (CPAL), located in Dubai, will act as an independent price administrator. In the coming months, CPAL plans to enhance its operations with the aim of publishing premiums based on transparent transactions on Metalshub, while also incorporating market insights from the physical trading of metals that meet the specified criteria.
Commenting on the launch of CPAL, Georgina Hallett, Chief Sustainability Officer and Head of Physical Markets, enunciated, "I'm thrilled that we have made such quick progress that we are now able to announce the incorporation of CPAL in Dubai, a location that provides us with both the agility to respond quickly to market developments and the access to a rapidly developing international metals centre."
Everything in the discussion paper
The discussion paper discloses the proposed methods that the pricing administrator plans to use for setting premiums on LME-branded metals that meet sustainability standards and are traded on Metalshub. The main approach for pricing will rely on arm’s length transactions carried out on the platform.
If trading activity is low, the pricing administrator might consider bids, offers and/or independent evaluations. All relevant data will be carefully examined for consistency and integrity and adjusted to reflect commercial factors like delivery location and contract terms.
The feedback from the discussion paper will play a crucial role in finalising the methodology. CPAL will take charge of overseeing, implementing and updating it as we move forward.
Also read: US aluminium imports slip 2% in H1 2025 amid tariffs and softer demand
All about Metalshub
Metalshub stands out as a top-notch software provider dedicated to simplifying the physical trading of raw materials. Their innovative solutions empower customers to efficiently manage the buying, selling and trading of ferrous, non-ferrous and minor metals, along with scrap materials. If the aligned metals meet premium sustainability standards, it can be traded on this platform, which allows buyers and sellers to carry out transactions that align with the LME’s established guidelines.
HKEX x CPAL: Price administration
CPAL will be operating as a new subsidiary of HKEX, based in Dubai. CPAL will serve as an independent pricing administrator for commodities with the aim of delivering unbiased price reporting and insightful market analysis for the global metals market. This includes lending a hand to the LME as it works on developing sustainable metal premia. The goal of this initiative is to boost transparency and standardisation in sustainable metal pricing, all while adhering to internationally recognised methodologies and third-party sustainability assurances.
HKEX Chief Executive Officer, Bonnie Y Chan, stated, “The launch of CPAL in Dubai marks an exciting milestone for HKEX Group as we expand our global footprint. The Middle East is a region of growing significance for the commodities market and our presence there will allow us to better serve international stakeholders, deliver trusted pricing and analysis and accelerate the development of sustainable metal markets. This initiative reflects our long-term commitment to building a world-class commodities business, led by the London Metal Exchange and continuing our stakeholder engagement in this part of the world.”
Incorporating sustainability credentials into the LME brand-listing requirements
LME's effort builds on the responsible sourcing standards, which were rolled out in 2019 and officially took effect in 2023. Now, brands listed on the LME need to secure specific ISO certifications and show that it is in line with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. This ensures that the metals traded meet globally recognised minimum standards for ethical sourcing.
While the LME acknowledges the rising significance of broader sustainability metrics, like carbon footprints, it’s taking a measured, market-driven approach. This strategy aims to prevent any disruptions to global supply chains or issues with contract liquidity. By introducing premium pricing for metals that hit higher sustainability benchmarks, the Exchange is looking to gauge market interest and gradually weave sustainability into its core contracts.
Aluminium-industry focused audience engagement process
The IAI carbon footprint methodology and ASI performance standards are now seen as solid benchmarks for defining what enhanced sustainable aluminium pricing looks like. Feedback from the community emphasised the importance of creating verifiable, transaction-based benchmarks. This input led the LME to adjust the proposed carbon threshold from 13 tCO₂e down to 10 tCO₂e and to think about glide paths that align with the industry's net-zero goals. The firm is committed to working with stakeholders to fine-tune these strategies, making sure that producers who actively cut emissions get the recognition they deserve, while also ensuring that the methodology keeps evolving in step with market trends and sustainability aims.
Benefits for participants
For both buyers and sellers, it creates a clear benchmark for transactions involving premium sustainable metals, all while keeping existing contracting practices intact. Investors and financial backers can feel more assured that projects focused on sustainable metals will deliver noticeable premiums. Meanwhile, governments and international organisations will have access to valuable data to shape their policies on sustainability, critical minerals and supply chain security. For the LME, this mechanism strengthens the importance of its base prices, ensuring that trading in sustainable metals continues to enhance market liquidity and price discovery.
To know more about the global primary aluminium industry 2025 outlook, read “Global Aluminium Industry Outlook 2025”
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